Trading in plastic resin futures contracts, which was expected to begin on the London Metal Exchange before the end of this year, now will not be launched until May.
London-based LME, the world's biggest nonferrous metals and traded options exchange, announced it plans to commence trading in its first two plastics contracts for polypropylene and linear low density polyethylene May 27.
An LME spokesman blamed the later starting date on the amount of detailed preparation work still to be completed by third-party suppliers, including information technology companies providing computer services and London Clearing House, used by the LME to match and underwrite business between members.
Originally, LME had hoped to launch its first plastics contract trading by mid-2004, but postponed the deadline to allow for more plastics industry consultation.
The LME spokesman said some brokerage companies already have employed senior industry specialists to deal with plastics futures.
In June, LME released details of plastics contract specifications to allow interested parties to gear up for the trading launch. The materials will be a general-purpose injection molding grade of PP without additives and a general-purpose film/blending grade of LLDPE with slip and anti-block additives.
The contract size for plastics will be based on 54,564 pounds per lot, representing one 40-foot container load of 18 pallets. Futures will be tradable, primarily in U.S. dollars, each month for up to 15 months forward, according to LME.
LME will establish an official price daily at 4 p.m. London time, on the basis of that day's ``open outcry'' trading. That will provide the industry with a benchmark price.
LME expects plastics manufacturers and consumers to use the tools to hedge against pricing risks.
If trading of LLDPE and PP prove successful, the exchange aims to add contracts for high and low density PE and bottle-grade PET.